Tech Industry

Buy.com loses big on pricing goof

The company offered a $588 computer monitor for $164.50, attracting hordes of buyers. But only 143 of them will get the bargain price. Some of the rest are hopping mad.

Buy.com lost more than $60,000 as well as the goodwill of some of its customers after it mistakenly offered users a computer monitor at far below its actual selling price. Some customers say they've been unable to get a straight answer from the company.

Buy.com, which guarantees the lowest price on a range of products including hardware and software, blamed human error for the mistake, in which the Hitachi SuperScan 753 monitor was offered for $164.50. It normally sells for $588.

Today, Buy.com said it would honor the $164.50 price for the 143 monitors it had in stock, but would cancel all the other orders. That means the Internet retailer will receive only about $23,500 for merchandise worth more than $84,000.

Since yesterday, Buy.com has also added a section on typographical errors to its sales policy. In the event of such errors, the policy now reads, "Buy.com shall have the right to refuse or cancel any orders placed for product listed at the incorrect price. Buy.com shall have the right to refuse or cancel any such orders whether or not the order has been confirmed and your credit card charged. If your credit card has already been charged for the purchase and your order is canceled, Buy.com shall immediately issue a credit to your credit card account in the amount of the incorrect price."

Whether that disclaimer covers Buy.com in terms of legal liability is hard to say. "It really depends on what the state law is, and that's not such an easy thing to determine on the Internet," said Allen Hile, assistant director of the marketing practices division at the Federal Trade Commission.

However, FTC regulations do require that mail and telephone retailers ship merchandise within 30 days of receiving an order, notify the customer if the shipment cannot be made on time and give him or her the choice of waiting longer or getting a refund. Refunds must be made within seven days, or credited to the customer's charge card account within one billing cycle.

Buy.com CEO Scott Blum said the typo on the monitor price was the first such occurrence for the retailer, but some of the company's customers say it has given customers the runaround on well-priced items before.

Brian Rizzo, a programmer from Pittsburgh, told CNET News.com that he has asked for a refund from Buy.com after waiting for more than a month for the company to deliver a 12-megabyte Diamond Multimedia Monster 3D II card he ordered in December. When the card hadn't arrived by last week, Rizzo called the company, only to be told that the product would not be in Buy.com's warehouse until the end of the month. He then contacted Diamond, which confirmed that it was indeed shipping the Monster 3D II.

A frustrated Rizzo finally canceled the Buy.com order. "I would never recommend [Buy.com] and I would even go so far as to recommend not using them," he said.

Similar complaints crop up at the Better Business Bureau of Orange County, California, of which Buy.com is a member. Its records show that 24 complaints about the company were filed in the last month. Those complaints have yet to be answered; another 30 complaints filed since December 1997 have been resolved. Many of the complaints were filed when the company was known as BuyComp, which changed its name to Buy.com in November 1998. CNET News.com has also received more than 70 emails from readers confused about the company's sales policies.

Many of the recent complaints filed with the Better Business Bureau are related to an offer Buy.com made in December for recordable CDs. According to one of the complaints, the company later rescinded the offer, saying the price was a typographical error. Many of the complaints showed that Buy.com posted the charge to customer credit cards before informing them that the offer was no good.

Buy.com customers say they have also been misled by order confirmation emails they receive after buying from the site. But Buy.com's order acceptance policy, listed under "Legal" on the site, says the emails are not binding and that Buy.com "reserves the right, at any time after receipt of your order and without prior notice to you, to supply less than the quantity you ordered of any item."